During the year under review, the Mumbai-based company cut down its advertising and promotional expenses to Rs 235 crore, less than half of what it incurred on this account in FY22, while staff costs also eased 12% to Rs 1,283 crore.
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However, PharmEasy, which is facing a debt-repayment burden, saw its finance costs surge during FY23 to Rs 665 crore, almost 2.5 times of the Rs 258 crore recorded in FY22.
In August, ET reported that PharmEasy’s management had adjusted its expectations to the ‘new reality’ to grow in a sustainable manner, and since then the company has significantly slowed down its cash burn.
Over the past year, PharmEasy tightened overall expenditures as part of prioritising its profitability plans, leading to a shift in its leadership position in the e-pharmacy market to Tata Digital-backed 1mg in terms of gross merchandise value.
Almost 90% of the company’s revenue came from sale of pharmaceuticals and cosmetic goods. Other revenue streams include licensing of internet portals or mobile applications related to sales and distribution of pharmaceutical and cosmetic goods, diagnostic services, tele-consulting, among others.
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PharmEasy has recently closed its Rs 3,500 crore rights issue, which gave it much-needed room to clear pending debt and continue growing its business. Ranjan Pai, chief of Bengaluru-based Manipal Group, emerged as the largest shareholder in API Holdings, with an at least 15% stake after the rights issue.In the rights issue, PharmEasy was ascribed a valuation that is a 90% discount to its peak valuation of $5.6 billion.
Some of PharmEasy’s lenders including Goldman Sachs, MacRitchie Investments and EvolutionX have converted a part of their debt into preference shares in the Temasek-backed firm. The Competition Commission of India on Tuesday granted its approval for issuance of preference shares in API Holdings to these entities.
The company’s main competitors in the online pharmacy sector include Tata 1mg, Flipkart Health Plus, Reliance Netmeds, Apollo, among others.
In addition to online pharmacy, the company also owns listed diagnostics firm Thyrocare.
ET had reported on August 30 that PharmEasy had clocked earnings before interest, tax, depreciation and amortisation (Ebitda) of Rs 40 crore for the first four months of fiscal 2024.